From Mao to Xi: Historical Context and Economic Evolution

Upon Mao Zedong's consolidation of power in China in 1949, the Communist Party (CCP) wielded an iron fist, mirroring the Soviet model and instituting a command economy. Since initiating Deng Xiaoping's economic reforms in 1978, China has undergone a transformative journey from a closed economy to a global economic powerhouse, lifting nearly 800 million people out of poverty in one of the greatest economic miracles of the 20th century [1]. To establish itself as a counterweight to modern-day American hegemony in Asia, the Chinese Communist Party under Xi Jinping has veered towards assertive authoritarianism. This shift finds expression in the Belt and Road Initiative (BRI), a global infrastructure program launched in 2013 and ostensibly designed for economic development. However, beneath the surface, the BRI serves as a strategic tool for expanding China's influence, often at the expense of the sovereignty and economic stability of the nations involved. This article contends that the BRI, while presenting itself as an economic venture, is a calculated instrument for the spread of authoritarianism, achieved through debt diplomacy and strategic geopolitical positioning.

Deng’s philosophy of "hiding your strengths and biding your time” was definitively terminated by Xi Jinping in his 2017 address to the CCP, where he asserted, "It is time for China to take center stage in the world" [2]. Xi's transformation from an easygoing persona to a rigid communist dictator is evident in the crackdown on critics like Ren Zhiqiang. The abandonment of human rights considerations within the country coincides with China's territorial assertiveness in Eurasia and the Asia-Pacific. Xi’s flagship project, the BRI has strategic underpinnings that go far beyond economics. Theories developed by Nicholas Spykman and Alfred Mahan suggest that controlling the “rimland” of Eurasia and projecting sea power is essential for exerting influence over the heartland and, consequently, the world [3]. In this light, the CCP under Xi utilizes BRI investments to establish port bases connecting key nodes along sea lines of communication, i.e. maritime routes and pathways that facilitate the movement of goods, resources, and military assets across the seas. Despite the CCP's claims that the BRI promotes economic prosperity in participating countries, its opaque financing mechanisms and pressure to align policies with Chinese political interests reveal a more hegemonic agenda, fostering economic dependence to make smaller nations subservient.

Opaque Financing and the Weaponization of Debt

Placing China at the center of Eurasian trade markets, the BRI aims to weaponize the global supply chain and secure technological dominance. This leads to unequal market dynamics favoring China and increases its influence in a growing sphere centered on non-democratic values. China's ability to set global standards benefits its companies and state-owned enterprises, giving them market advantages. Despite concerns, many countries are attracted to the BRI for global connectivity and Chinese investment opportunities, often perceiving no viable alternatives. 

As Founding Father John Adams put it, "There are two ways to conquer and enslave a country: One is by the sword; the other is by debt" [4]. In this context, the CCP, which vehemently claims to oppose colonialism, has paradoxically embraced colonial-era practices through the strategic use of debt. China has surpassed 5% of global GDP in international loans and is ahead of traditional lenders like the World Bank, the International Monetary Fund, and all the creditor nations of the Organization for Economic Cooperation and Development combined [5]. The divergent nature of Chinese investment efforts lies in its promise of a "no-strings-attached" approach, more often than not striking deals with existing authoritarian and semi-authoritarian regimes such as Laos, Iran, and Pakistan. Investments in infrastructure projects are strategically structured to ensnare recipient countries in debt, a tactic underscored by the Chinese government's substantial bailouts of over $100 billion between 2019 and 2022, positioning itself as a lender of last resort and, in turn, benefiting its own banks [6].

Although loans and bailouts hold the potential for positive outcomes, it is essential to scrutinize the details, especially when engaging with sovereign nations on a large scale. Notably, nearly 30% of contracts include clauses requiring borrowing countries to uphold a special account in a bank selected by China, leading to immediate outflows [6]. The Chinese government retains the right to terminate contracts in response to policy changes in recipient countries. This gives Beijing the ability to use funding as a tool to enforce and leverage other countries’ policies on Chinese hot-button issues such as Taiwanese sovereignty or the treatment of Uyghurs. In January 2022, Nicaragua officially joined the BRI one month after severing diplomatic ties with Taiwan [7]. Furthermore, the utilization of opaque financing mechanisms, including state banking loans, the Sovereign Wealth Fund, and the Asian Infrastructure Investment Bank, adds a layer of complexity to understanding the terms of agreements. The lack of transparency and the absence of central government institutions, shielded by confidentiality clauses, render it challenging for recipient nations to assess long-term implications and fully comprehend the conditions associated with the debt.

Covert Dynamics of Strategic Subjugation 

Several states that have joined or have expressed an interest in joining the BRI have authoritarian or semi-authoritarian regimes. Noteworthy instances of sovereign states succumbing to the BRI's veneer of economic growth include Cambodia and Sri Lanka. Exploiting pervasive corruption and cronyism in Cambodia, the CCP has made substantial investments in the Ream Naval Base, with Cambodian officials denying its intended use by Chinese warships. Ream is strategically positioned along the southeastern coast of Cambodia, close to the border with Vietnam. At the opposite extremity of its 435-kilometer coastline lies Dara Sakor, a Chinese property development valued at $3.8 billion, situated not far from the Thai border. American sanctions concerning corrupt practices by Chinese-led companies coincided with Phnom Penh banning U.S. visits to the base. Chinese companies in Dara Sakor like the Union Development Group (UDG) have dubious dealings and track records [8]. 

In 2020, the Treasury Department implemented Magnitsky Act sanctions on UDG, citing concerns about human rights violations related to the eviction of individuals from their villages [9]. Additionally, the U.S. expressed apprehensions regarding the potential military utilization by China of the new airport at Dara Sakor, which features a runway significantly longer than necessary for the expected smaller airliners catering to a secluded tourist destination. This development coincides with Cambodia's gravitation toward complete authoritarianism, with the main opposition party barred from contesting the elections. Cambodia’s example reflects a broader aim for Beijing to have its authoritarian capitalist model surpass the American-led Liberal International Order.

While Cambodia stands out as a reminder of the CCP’s aim to fuel authoritarianism in Asia, Sri Lanka is the primary example of China using a nation-state’s economic collapse to further its geostrategic aims. The controversial Rajapaksa family, the predominant ruling elite of the country till its economic collapse in 2021, has been accused of selling out to China by taking up “White Elephant” projects such as the Hambantota Port. Built in 2010, the $1.3 billion port was built using debt from Chinese state-owned enterprises. Unable to repay its debt, Sri Lanka gave China a controlling equity stake and a 99-year lease for Hambantota port, which it handed over in December 2017 [10]. Given the existing capacity and expansion plans at Colombo port, Hambantota's economic rationale is weak, fueling concerns that it could become a Chinese naval facility. Colombo Port, the largest and busiest port in Sri Lanka, was undergoing expansion plans to increase its capacity further. Instead of investing in a new port like Hambantota, it would have been more economically sensible to focus on enhancing and optimizing the capacity of the existing Colombo port. Some argue that since the Chinese loans for Hambantota Port specifically totaled $1.3 billion, just 4.8 percent of the government’s total external debt, they were not the cause of the country’s debt crisis [11]. In reality, the CCP’s goal was far more than just macroeconomics. It aimed to use this debt to force a national government to align its policies with the CCP and establish a naval foothold in one of the most strategic channels in the Indian Ocean, right next to their geostrategic rival, India. This strategy aligns with the Rimland theory outlined by Spykman and Mahan.

IMEC and Strategic Investments in Asia 

In countering the pervasive influence of authoritarianism facilitated by a debt trap strategy, the United States must employ a dual approach encompassing both strategic and economic dimensions. Acknowledging the delicate nature of this endeavor is crucial, as direct military or economic confrontation with China is neither feasible nor advisable. While enhancing collaboration with key allies in Asia to strengthen strategic security efforts such as the Quadrilateral Security Alliance (QUAD) is imperative, caution is essential to avoid direct military clashes, given the looming threat of nuclear weapons.

The India Middle East Economic Corridor (IMEC), introduced during the 2023 G20 Summit, emerges as a primary diplomatic tool against China's Belt and Road Initiative [12]. However, it is essential to recognize the complexities within this approach. The U.S.-Saudi relationship, characterized by historical turbulence and President Biden's vocal criticism of alleged human rights abuses in Saudi Arabia, adds a layer of intricacy. The CCP’s involvement typically involves political quid-pro-quo, constraining partner countries' autonomy. To effectively counter the BRI, a steadfast commitment to democratic principles, human rights, and the preservation of a nation’s sovereignty must underscore the IMEC initiative, especially in the context of energy transition and economic development. While implementing such principles may pose challenges, the diplomatic corridor connecting India, the Gulf states, and Israel holds paramount importance for U.S. foreign policy in Asia. This is particularly significant as China solidifies its role as a mediator between Iran and Saudi Arabia [13]. While Sino-Saudi trade has topped $87 billion, China also seeks to secure Tehran’s political support and oil supply, with Beijing buying more Iranian oil now than it did before the U.S. imposed sanctions on Iran [14].

The IMEC concept is rooted in diplomatic efforts spanning the last five years. It builds upon the foundation laid by the Abraham Accords, which fosters normalized relations between Israel and the Gulf states, and the I2U2 multilateral, a strategic grouping of India, Israel, the U.S., and the U.A.E. that seeks to deepen economic collaboration. Contrary to the earlier belief that condemning China's BRI as "predatory economics" would distance Middle Eastern allies, the IMEC presents an alternative approach capable of rallying regional allies. It introduces a new narrative for U.S. diplomats, aligning more closely with the interests of its steadfast allies in Asia and acts as the economic version of the QUAD. Facilitating strategic investments and economic collaboration initiatives rooted in shared principles of democracy is essential for the United States and its allies to counter the BRI and in turn, the spread of authoritarianism in Asia and around the world.